The Arkansas Department of Human Services paid an information-technology company more than $4 million for services it failed to perform, according to testimony at a legislative hearing Tuesday.
The department had worked with the now-defunct Ohio-based company C.H. Mack Inc. to help design a program for contractors to input patient information for people seeking or receiving home-based services through the Developmental Disabilities Services Division, the Aging and Adult Services Division and the Office of Long Term Care. The program was supposed to be designed specifically for Arkansas, allowing evaluations of patient needs to be entered remotely from homes in areas where there might not be wireless Internet connections.
However, C.H. Mack was unable to deliver on the promised software, forcing patient evaluators to pay for their own Internet connections. Also, they often were disconnected from the software and resorted to filling out paper assessments. After the company had collected $4,837,459 in state funds from three Human Services Department divisions, payments were suspended in late 2013 and the contract was terminated in 2014.
Since then, the state has agreed to pay another contractor, Florida-based CoCENTRIX, more than $6 million to complete the original work as well as perform some additional tasks. Department officials testified before the Legislative Joint Auditing Committee that they have not and likely will not seek to recoup any of the money paid to C.H. Mack.
"To me it appears that it was close to the full contract amount that [C.H. Mack] got, when we knew about halfway through the contract that there was a problem and we went on and pushed through with it to the end," said Rep. Kim Hammer, R-Benton, co-chairman of the committee.
Legislators spent almost two hours questioning department officials and private contractors about the contract.
"As an agency you have the power when you see a contract that is not being met, to stop payment at that point and ask for a revision of a contract or repayment for services that have not met a timeline," said Rep. Charlotte Douglas, R-Alma. "Did this go on past a point where you knew it was not working and we kept paying them?"
Krista Hughes, director of the Aging and Adult Services Division, said officials there reacted when they saw the contractor falling behind schedule and developing a program that did not work. But she said she wasn't prepared Tuesday to detail the state's response step by step.
"When we identified that there were significant problems with the performance of the contractor, that is when we pulled in the Office of Quality Assurance, we pulled in our legal team, we pulled in the Medicaid team to determine what recourse we had as a state," Hughes said.
Legislators asked whether the contract with CoCENTRIX includes safeguards to protect the state from this type of situation. A representative from CoCENTRIX said the company gets paid when it completes certain activities and based on how much the software they created is used. Hughes said the new contract also calls for a third party to provide oversight, a provision that was not in the C.H. Mack agreement.
Sen. Jimmy Hickey, R-Texarkana, asked repeatedly how the bills were approved and whether the divisions had plans to seek reimbursement.
Tim Lampe, director of the Human Services Department's Office of Quality Assurance, said the company was not paid using a traditional fees-for-services method. C.H. Mack used purchase orders, which made it harder to differentiate the services provided.
Lampe said the department's attorneys advised discontinuing payments when the problem was recognized, but did not make recommendations on recouping the money.
"I think this is inexcusable, what has happened," Hickey said.
Legislators said Tuesday that the mistake makes them question whether the divisions can be trusted to handle the increased patients if they are allowed to expand under the Community First Choice Option. The program offers enhanced Medicaid funding made available under the 2010 health care overhaul law. It would allow Arkansas to move almost 3,000 people with developmental disabilities off a waiting list for home-based services, such as help with daily living tasks.
Rep. Nate Bell, R-Mena, tied the contract error to the expansion request quickly and also questioned whether the department's waiting list count was correct.
"I think it goes to public trust, and even further -- and I'm known for being somewhat blunt -- it's clear I'm opposed to what the division wants to do with the [Community First Choice Option]. And the reason is clear; there is a trust gap," Bell said. "Then you sit here and have the audacity to ask us to allow you to do a massive expansion of programs under your supervision, when you just told us that you learned a $5 million lesson that you have made no significant legal action to pursue recovery."
The Community First Choice Option allows states to receive a 6 percentage-point increase in federal funding they receive to provide in-home care to the elderly or disabled, meaning the federal portion of Arkansas' costs would increase from 70 percent to 76 percent.
In exchange, the state would have to eliminate its waiting list and serve all qualified applicants. Human Services Department officials have said the increased federal funding would enable the state to provide services to those on the waiting list -- with Washington picking up the cost.
The state currently serves more than 14,000 people through its home-based disabilities services.
The contract with C.H. Mack asked the company to design software to track the needs for patients who receive the home-based services, including those on the waiting list. But legislators focused Tuesday on the connection to the Community First Choice Option program.
Pine Bluff Psychological Services has been paid by the state to contact the more than 3,000 people the Human Services Department identified as qualified for services and who asked to be placed on the waiting list. The company's job is to reassess those people to make sure they are still eligible for services and interested in receiving them.
The Developmental Disabilities Services Division submitted a breakdown of that assessment work Tuesday. According to the breakdown, of the 3,024 people on the waiting list, Pine Bluff Psychological Services has assessed 1,623 and determined they are still eligible for services.
The company is still attempting to reach 1,171 people. About 160 are scheduling assessments, others had moved, died or declined assessments, or were too young to be assessed at this time.
The contract setback did push the company to use paper assessments in some cases, which then have to be entered manually into the electronic system and slows down the process. It also made it harder for the company to find accurate contact information for those patients.
Human Services Department officials said that if the department does not expand the Community First Choice Option program, the waiting list could expose the state to lawsuits like the 2003 claim lodged by Mark George, who argued that his daughter, then 5, was placed on a waiting list for home- and community-based services in violation of federal requirements that she be offered one of those services.
The state settled the lawsuit, then increased the cap on its programs to eliminate the waiting list. But a decade later, the waiting list has almost doubled from what it was at the time of the lawsuit, Human Services officials said.
A section on 12/17/2014